Our psychology is terribly easy to trick. We’re actually pretty good at it ourselves

In each and every day of our lives we are bombarded with psychological tricks and quirks which have one goal: Make us spend more.

Advertisements take many forms and influence us both at a conscious and a subconscious level. However, every now and then a consumer research appears. It’s always rare, small and hard to find due to certain conflicting interests of the media but they always teach us valuable lessons.

This time the NY Times (Arik Asimov) gets the credit for giving a stage to a new research on the American wine consumer which I find fascinating.

Wine connoisseurs and the image of the Nuevo rich

Wine is probably the drink most associated with good living, refined palate and the upper classes (we’ll discuss associations in advertising in the near future). There are reasons why wine is portrayed and marketed as such a complicated product with infinite grape types, vineyards, years of aging, complicated ceremonies and concepts such as astringency.

These reasons include:
1. Differentiating the product
2. Differentiating its consumers
3. and above all Money

The more complicated, intricate and socially differentiating the higher it can be priced.
That’s why I was fascinated by Arik Asimov’s article for the NY Times. Apparently the intuitive and logical approach to wine and other “fine” or gourmet foods is not without merit. I’ve always wondered what would happen if I was presented with a blind taste test of anything of the sort. Now we’ve got an answer.

It seems self proclaimed wine connoisseurs have been laid bare by two recent blind taste tests. 500 volunteers rated 540 bottles of wine ranging up to $150 a bottle. Now for the fun part: A $10 bottle of wine made in Washington outscored a $150 bottle of Dom Perignon Champagne and a $2 cheap California wine outscored a $55 bottle of Napa valley Cabernet. It is important to note true wine experts actually preferred the pricier wines. We can learn quite a bit from this research:

#1 If it doesn’t taste better we must buy it for another reason
Asimov mentions a study performed in Caltech and Stanford business school were the price of wine was showed to highly influence its taste in the eyes of the test subjects.

It seems our consciousness is easily fooled by cheap psychological tricks. This phenomenon directly relates to the psychological concept of Cognitive Dissonance. A state of cognitive dissonance is actually a gap created between belief and behavior which the mind closes either through changing behavior or changing believes. Believes are easier to change then behavior.

Now think of a $50 dollar bottle of wine you just bought. It must taste better than a $5 bottle of wine otherwise you wouldn’t have paid so much for it. Your mind has to convince itself it taste much better as well so the cognitive dissonance is resolved.

#2 If we’re not fooled there must be another reason why we still buy expensive wines
Even after reading the research and writing this post I’ll probably continue buying the more expensive wines and avoid the cheaper ones even though they may taste the same. Why is that? There must be another thing of value in a pricey wine bottle.

Surely enough there is: Image. When we buy a $50 bottle of wine we buy the image that goes along with it. Having friends over and presenting a decent bottle of wine is a means of communicating as well as any. We need not be fooled but we sometimes have to get along with the program.

Even though we’re not about to drastically change our behavior it’s still good to know the forces at work and how susceptive our psychology really is. Reinforcing and sharpening our skeptic instinct is always recommended.

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Disclaimer

This blog is about my personal opinions which are based on my financial education. My posts and articles are to be regarded with the appropriate sceptisism and should under no circumstances be used to replace professional financial assistance.